Scott Wylie - Vice President of Investor Relations John P. Daane - Chairman, Chief Executive Officer and President Ronald J. Pasek - Chief Financial Officer, Principal Accounting Officer and Senior Vice President of Finance

Aashish Rao - BofA Merrill Lynch, Research Division Delos Elder Unknown Analyst David Wu Uche X. Orji - UBS Investment Bank, Research Division Ruben Roy - Mizuho Securities USA Inc., Research Division Christopher J. Muse - Barclays Capital, Research Division James Schneider - Goldman Sachs Group Inc., Research Division Nathan Johnsen - Pacific Crest Securities, Inc., Research Division Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division Ross Seymore - Deutsche Bank AG, Research Division Srini Pajjuri - Credit Agricole Securities (USA) Inc., Research Division Sanjay Devgan - Morgan Stanley, Research Division Christopher B. Danely - JP Morgan Chase & Co, Research Division Sujeeva De Silva - ThinkEquity LLC, Research Division Tristan Gerra - Robert W. Baird & Co. Incorporated, Research Division Shawn R. Webster - Macquarie Research Ambrish Srivastava - BMO Capital Markets U.S. Ian Ing - Lazard Capital Markets LLC, Research Division

Good day, everyone, and welcome to the Altera Fourth Quarter 2011 Earnings Results Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Scott Wylie. Please go ahead, sir.

Thank you for joining this conference call, which we will be available for replay telephonically and on Altera's website shortly after we conclude this afternoon. To listen to the webcast replay, please visit Altera's Investor Relations Web page, where you will find complete instructions. The telephone replay will be available at (719) 457-0820, and be sure to use code 258712. During today's prepared remarks, we'll be making some forward-looking statements. In addition, management may make additional forward-looking statements in response to questions. In light of the Private Securities Litigation Reform Act, I would like to remind you that these statements must be considered in conjunction with the cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements in this call involve risks and uncertainty, and that future events may differ from the statements made. For additional information, please refer to the company's Securities and Exchange Commission filings, which are posted on our website or available from the company without charge. With me today are John Daane, our CEO; and Ron Pasek, Chief Financial Officer. As we indicated during our last call, we have added some additional information into our earnings release that we previously have covered in our prepared remarks. And in an effort to get to your questions as quickly as possible, we are attempting to be briefer in our prepared remarks by no longer repeating information that is included in the release, unless there's a need for application or clarification. Ron will open the call and John will follow. After John concludes his remarks, we will take your questions. Prior to the Q&A session, the operator will be giving instructions on how you can access the conference call with your questions. I would now like to turn the call over to Ron. Ronald J. Pasek: Thank you, Scott. Despite the headwinds of the second half, 2011 was a good year following a phenomenal 2010. We saw revenue increase nearly 6%, with another year of share gains versus our primary competitor. Gross margin at 70.4% was stronger than our 70% guidance. As the year progressed, we successfully stepped up our R&D spend to a level more in line with our long-term business model as we began the introduction of our 28-nm FPGAs and initiated a series of strategic initiatives with a longer-term payoff. We were disciplined though. OpEx at $605 million was $5 million under the guidance for the year. Our profitability remains the best in the PLD industry. Cash flow from operations in 2011 was $960 million, an increase of 12% from the prior year despite a net income decrease of 2%. As a result, we were able to raise our dividend by 1/3 as well as repurchase nearly 200 million of Altera shares. My impression is that we managed well during a year that had its ups and downs. Our response to the Japanese earthquake supply-chain issues was quick and effective, allowing us to avoid seriously disrupting our customers. Facing cyclical revenue deceleration in the second half, we managed inventory adeptly. As we entered 2012, our inventory levels and lead times are normal. In 2011, 40-nm revenue increased over 100% and represented 22% of revenue for the year, with good growth prospects in front of us for the next several years. Looking forward, book to bill in Q1 2012 is now above 1 and although we are far from great visibility, we do you see revenue growth returning in Q2 2012. So all together, we are well positioned this year for growth. With that, let me turn the call over to John. John P. Daane: Thank you, Ron. Fourth quarter revenue deceleration was caused by broad end market inventory reduction, coupled with slowdowns in a few markets such as Wireless and test. As expected, Military grew significantly in the quarter and Computer Storage declined due to the end of the earthquake-related ASIC replacement business. For first quarter revenue, we are forecasting a 5% to 9% sequential decline, with program timing in Military contributing to slightly more than half of the decrease measured to the midpoint. Wireless should also be down across multiple geographies due to continued inventory depletion aftermarket softening in the second half of 2011. For 2011, Altera grew revenue 6% and we are very pleased with this result. Once again, we increased our PLD market share and we also outgrew the semiconductor industry by at least 2x. With design incumbency from our 40-nm product success, our momentum continues in 28-nm. With performance, power and software leadership, coupled with feature advantages, including transceivers and DSP, we are winning a majority of the designs in the market. In Q4, Stratix V revenue increased 49% sequentially, and we shipped first revenue for Arria V. The growth opportunity for PLDs comes from 2 market forces. First, the continued replacement of ASICs due to the tipping point, where with each new process node, our products become increasingly more cost-efficient. Second, we are seeing a blending of microprocessor, DSP, ASSP and FPGA technology to create new products through silicon convergence. In combination with our programmable fabric, a technology not broadly available in the industry, we are integrating complex IP blocks of microprocessors to replace these discrete solutions. With the tipping point and silicon convergence, we have a servable market greater than 10x the size of today's PLD industry, providing the opportunity to continue to grow revenues at twice the rate of the semiconductor industry. Now let me turn the call back to Scott.

We would now like to take questions.[Operator Instructions] Operator, would you please provide instructions and poll for questions?

[Operator Instructions] And we'll go first to James Schneider with Goldman Sachs. James Schneider - Goldman Sachs Group Inc., Research Division: I think, John, you talked about visibility enough to see that Q2 revenues would be up sequentially. Can you talk a little bit about what gives you that confidence? And what kind of signals you're seeing broadly from your customers on that? And specifically, within communications, whether you expect wireless or wireline to begin rebound first? Ronald J. Pasek: Jim, this is Ron. It was me that mentioned it. As you know, we usually don't give guidance more than a quarter in advance. We have limited visibility, but the visibility we do have suggests that Q2 is going to be a sequential growth quarter. Beyond that, I really -- we really can't get into a lot of detail by segment or vertical, et cetera. John P. Daane: Just to follow up on a communications side, Telecom was flat in the fourth calendar quarter from Q3, and we're forecasting it to roughly do okay again this quarter. It's within that category. It's really Wireless that we see the decreases, Wireless specific to -- really some inventory accumulation at end accounts because they thought that between India, China and North American deployments, they would be stronger in the second half the year. Obviously, in all 3 geographies that did not happen. So they've been burning through inventory. We do think that this is most likely the last quarter of that and that we'll see growth again in the future. A couple of other points to note, as we've said before, book to bill this quarter is above 1, which is one of the reasons that we do think we're now seeing the bottom. We also, towards the tail end of the year, saw some acceleration in business from our small accounts, which is why we beat our previous forecasted range. This is early, but we think those 2 signs are positive that perhaps, inventory in most segments is very, very lean. Demand is stable in most segments, and we're now starting to see the bottom. And again, hopefully believe that we will grow in the second calendar quarter.

And we'll go next to Vivek Arya with Bank of America Merrill Lynch. Aashish Rao - BofA Merrill Lynch, Research Division: Hey, this is actually Aashish Rao instead of Vivek. Question on the Military sales drop. I mean, you notice in the press release that the Military sales were going to be sharply down. Can you discuss kind of what's driving the sharp drop in sales and what you're timing for growth expectations in this end market are? John P. Daane: Absolutely. I think those of you that have followed the PLD industry know that military procurement is program-based rather than spread out over time as that you see with the commercial sector. We therefore have quarters of significant growth as we did in the fourth calendar quarter. And correspondingly, we also have some quarters where you see significant decline as in the first calendar quarter. Although in aggregate, our Military revenue continues to grow. Overall, its decrease that we're seeing this quarter is not tied to one program. It's actually over several programs. And again, it's just timing, not related to anything else.

And we'll go next to David Wu with Indaba Global Research.

Yes, I have a quick question on -- if I look at last recession, coming out of the '09 first quarter, the following quarters jumped pretty quickly, sharply for Altera, as well as your lead competitor. I was wondering whether the end demand situation would give us the same kind of exit trajectory as we have the last time. And if not, why not? Ronald J. Pasek: Difficult to -- this is Ron. It's difficult to say. I mean, there are some similarities between 2009, although I think the inventory depletion we saw this time was probably just as severe, if not more. And we're in the midst of a product transition as well. It's really hard to look forward that far and say for certain what we think this curve may look like. We -- as I said earlier, we have the best visibility, it just did within the current quarter at this point.

And we'll go next to Shawn Webster with Macquarie. Shawn R. Webster - Macquarie Research: I was wondering a couple of things, if you give us an update on 28-nm last quarter, you said it was worth a couple million dollars. I'm just curious on that. And then is there any update to your OpEx guidance that you outlined at your Analyst Day? I believe it was somewhere around $671 million for calendar '12? John P. Daane: Stratix V was up 49% sequentially. And we did ship revenue for Arria V. We've, typically, over the last 5, 6 years, soon as a product line gets to $1 million-ish, we provide a revenue number to start with. Arria's still below that figure. So our 28-nm ramp continues to go extremely well. And again, we feel that for the production-based market segments, we are winning about 2/3 of the overall designs, based on revenue potential. Ronald J. Pasek: And Shawn, to your question, the full year guidance I gave for 2012 for OpEx still stands. So exactly the same as we talked about in New York.

And we'll go next to Srini Pajjuri with CLSA Securities. Srini Pajjuri - Credit Agricole Securities (USA) Inc., Research Division: John, you said even excluding Military, it looks like your guidance is going to be for a sequential decline. I'm just wondering if I compare that with your -- some of your peers who are forecasting growth for Q1, I'm trying to understand now what the differences might be. And also, along the same lines, in the wireless business it was an inventory correction continue for several quarters now, where do you think inventories are at your customers and how does this compare with the previous cycles? John P. Daane: Okay, to answer that in reverse order, I think within Wireless, again we've had inventory, simply, because the market itself did go through a downtick in the second half of 2011. So customers were building in anticipation of a stronger back half of the year. They have inventory. We do believe that based on the take rate that will be depleted this quarter, and again this inventory is actually over several of our customers across several different geographies. So it's not tied to any one customer or any one place. So I would say, it's -- if the market itself did not change direction, we do feel that we'd probably be at a good spot in terms of inventory. Telecom, the business has been much more stable, and we don't see any significant inventory in that marketplace. In terms of differences, I guess versus our largest competitor, based on what they discussed for the first calendar quarter, they're seeing an uptick in their military programs; we're seeing a downtick in ours. I think again, what you've seen from both companies over time is there is some program-specific buying patterns that do vary overall. We're continuing to grow and we did have very strong growth in Military in 2011. Secondly, we're projecting that Wireless will be down due to inventory. They're projecting it to be up. I don't know of any specific program or design shifts or anything else that's driving this, other than we just believe that our customers have inventory and are going to be down. Other than that, I really couldn't tell other than I’d probably point out Q4. One major difference between the 2 companies is that our Mature and Mainstream categories did decrease. And that is very typical. If you go back over time, the Mature category is in decline as customers continue to obsolete, Mainstream as a category typically is in decline. And in particular, during a phase where customers are trying to deplete or drawdown inventory, Mainstream should decrease. And that's what you saw out of us. What you saw, I believe, out the -- our major competitor, is those 2 categories were flat for them. I attribute this, and I'm guessing that I attribute it to the obsolescence program that they've been running, combined with the significant price increase that they've had. Given time when the obsolescence program is done, I don't know how long that will run. Clearly, because these are products, older products for which they had very high market share. One would expect when this obsolescence is done, clearly our market share is going to tick up and probably, quite substantially. Number two, I think the other thing which has been a benefit to us is the obsolescence program and price increase have been very disruptive within the customer base. And there are a number of customers that have been doing business predominantly with our competitor, that in turn have opened up and are engaging with Altera. So we find it to be great because we not only have the momentum from 40-nm but we're getting some additional momentum into 28-nm. Other than that, it would be hard for me to guess at any the differences between the 2 companies.

And we'll go next to Ambrish Srivastava with BMO Capital Markets. Ambrish Srivastava - BMO Capital Markets U.S.: I just wanted to make sure I understood your comment, John. You said that the smaller customers are more stable. Are you alluding mostly to industrial, I'm assuming? And then just a quick follow-up. 40, 45 your competitor grew pretty meaningfully Q over Q, and I know Q over Q -- every quarter shouldn't matchup, but could you just help us understand why your revenues were down in that? John P. Daane: Sure. In 40-nm I think our revenues were down because of the downtick in Wireless and some of the other markets. So I think what you're seeing is some of the production programs where customers ended up with inventory, took a pause in the quarter. Nothing has changed there. And 40-nm, we believe that we captured the majority of the business. Our market share continues to be in the 60% range, and we expect that to continue going forward. Second part of the question, I'm sorry -- Ronald J. Pasek: Smaller customers. John P. Daane: Oh, smaller customers. You're absolutely right. We did see a comeback of some of the industrial customers in the tail end of the quarter. And the reason that's significant is we had figured the second half of December would be very slow, simply because it's almost impossible for a customer to turn from procurement of semiconductor devices to systems to be able to ship revenue in the quarter. So we had expected most people would push out anything in the back half of the quarter or back half of the month of December, simply because they wouldn't want inventory on their books. The fact that we saw an uptick and basically an acceleration of turns orders, we took that as a very positive sign because that means that people had firm orders early in the first calendar quarter that they needed to fulfill. And again as we pointed out, our book to bill so far this quarter is above 1. We just want to continue to remain cautious based on the macro environment and see what develops.

[Operator Instructions] And we'll go next the John Pitzer with Crédit Suisse.

Yes, this is Ryan Carver [ph] standing in for John Pitzer. Can you talk about clearly the PLD content in Wireless is a big driver for the revenue. Can you talk about clearly Wireless has been down in the past quarter or 2. Can you talk about how PLD content recovers, as Wireless comes back, and right into that is do you expect to see any ASIC or ASSP incursion upon the PLD business as the wireless CapEx comes back? And I have a follow up. John P. Daane: I do not see any incursion in the business from other products or other technology. As we've commented before, the content for programmable logic, at least our products and I'd assume our competitors as well, does increase with every generation in the system. Going from 2G to 3G, our content doubles in 3G. Going to LTE, our comment -- our content triples. And then as we move to LTE Advance it goes up 4x. So ultimately, if you look at communications and wireless, it's a great market for us. I do think part of the reason you're seeing Wireless softer is ultimately Telecom was reasonably soft in 2011. A lot of CapEx dollars were moved from Telecom over to the Wireless side, and then several carriers cut back on wireless deployments in the back half of the year. I do think that's temporary across both markets. Ultimately, LTE deployments in North America are very early. And I do believe will continue particularly with all the new handsets being sold and advertisements. Number two, you've got Japan, which is going to do LTE deployments. China is still very early in 3G, and we think that will continue. And then as you know, we've had the auctions of spectrum, fairly a long time ago in India without any deployment. And we do expect India for both 2G and 3G to pick up. So I think Wireless will do well, and then ultimately, Telecom as well because ultimately with the new generation of wireless technology, you need to upgrade the backhaul capability as we're seeing more data and video used, metro is going to have to go through an upgrade as well. So we think both segments over time have a very strong potential for us, and a very strong potential growth. We just happen to be in a period of time in the second half of 2011. And into this quarter, where we're seeing some ebbing long-term -- I expect to see continued solid growth out of comp.

And then my follow-up. Your competitors talked about 28-nm fairly explicitly outlining 350 design wins, 90 plus customers, $1 billion of lifetime revenue, production of their first devices in the June quarter this year. Can you put a little more color around this 2/3 of the available design wins that you guys are capturing with 20-nm and help us understand a little bit more sort of how you're quantifying that revenue? And when you expect to be in production with some of your first 28-nm products? John P. Daane: Yes, we do have different terminology than our competitor. We count something as a commitment when a customer commits to us, we count it as a design win when they actually put parts on a board. I think their probably calling our commits design wins. So the reason we haven't released data is I don't think it would be consistent. What we do is a look at design wins and losses. We don't look at it by socket. About 10 years ago, we changed that to look at based on the revenue potential out of that particular socket. In its peak year, we look at design wins and losses, not only to FPGAs but also to ASICs and ASSPs. And right now, within 28-nm, we're solidly winning 2 out of every 3 designs that are in the marketplace, again, based on the value of the design wins. Based on the claims of our competitor, we do take them very seriously. We do continue to ask ourselves what aren't we seeing, scrub data, visit customers, talk to customers. We simply don't see what they claim. And so far, within the ramp of the design value, where Stratix clearly has been ramping revenue. We haven't heard much from our competition in terms of revenue. We think so far, we're showing that we're doing very well in the marketplace as well. We'll continue to view that and see what's going on, but clearly, that's where we are. I think we do have a number of product advantages as we talked about, with a tailored product portfolio. It does give us performance advantage, power advantage, some features in terms of DSPs. Certainly transceivers again for many generations, that's been in our favor. And then coupled with software productivity advantage and the design win incumbency from 40. This is what we would expect to see and so far we're executing the plan. So we'll see how this plays out, but we're very confident in what we've seen and what we're doing.

And we'll go next to Brendan Furlong with Miller Tabak. Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division: Quick question. Do you have, outside of your distributors -- did you have a 10% customer in the quarter? Ronald J. Pasek: Yes, we did. We -- Huawei was 13%, I believe, in Q4 -- I'm sorry, 14% for Q4. Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division: So part of the adjustment obviously out of the Asia Pac or China region is obviously Huawei. Looks like it was down quite substantially year-over-year. Do you think that inventory depletion would be done at Huawei in the current quarter? John P. Daane: So what I do not want to do is tie my comments on Wireless to any particular one customer. As I did mention, it's actually across several different geographies. I expect Wireless to be down in Europe, I expect it to be down in Japan and I expect it to be down in Asia. But don't want to talk about any one particular customer. So hopefully, that gives you sort of a feel. Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division: Again for my last question, then. The small -- you said your small customers are coming back. Just curious about your -- what your larger OEM customers are telling you in terms of visibility going forward? John P. Daane: Well I think in terms of the market segments for the first calendar quarter, as we mentioned, we expect Military to be down because of program timing. Wireless again because of inventory, generally most of the other verticals to be slightly up or slightly down, not a lot of action yet. We do see a lot of stability. We have seen more expedites and pull-ins. We do, as we mentioned, have a book to bill which is strong so far this quarter, but that's basically our forecast for the quarter. And our customers remain cautious and I think what they're doing still is trying to minimize inventory and really only purchasing product when they have firm orders themselves.

And we'll go next to Ian Ing with Lazard Capital Markets. Ian Ing - Lazard Capital Markets LLC, Research Division: At some point should carrier CapEx return strongly, could you talk about any sort of shift in carrier investment we should expect, whether it's like 100 gig optical networking or same in terms of base stations and wireless backhaul? John P. Daane: It will depend on the particular market. I think what you're going to see is in developing countries OTN will probably get deployed more. Existing countries that have a significant infrastructure may deploy other types of technology. Clearly, Ethernet is growing very strongly within the telecommunications industry with some different flavors and features added to it. And I think certainly, you're going to see 100 gig get deployed. And there's a lot of development going on in the 400 gig space as well. All of those areas really benefit Altera quite well because we have the high-speed integrated transceivers. So for most of these applications, we really are the only PLD supplier. And then at the high-end, we have the performance with Stratix, which is another key. So ultimately, I think we're very, very well positioned within telecom for the growth. I think in some markets, you'll see wireless, microwave backhaul as part of the way to connect to the base stations. Within that space, we're by far the best-positioned PLD supplier. So I think we'll benefit all the way around. Ian Ing - Lazard Capital Markets LLC, Research Division: And for follow up Computering and Storage. You're guiding down I assume none of that is the temporary ASIC business and it’s just a further leg down in destocking. And briefly when you talk about OpenCL high-performance computing, is that a greenfield opportunity, or are you displacing things like GPUs or is it a combination? John P. Daane: Yes, so with OpenCL, what we're really targeting there is and I have to give absolute credit to NVIDIA for first recognizing the opportunity to develop higher-level compiler tools. It could operate off of a C-like language to take advantage of a non-microprocessor architecture for high-performance computing. We've adopted OpenCL. OpenCL is an open standard for parallel programming. FPGAs are wonderful for being able to instantiate multiple types of blocks to do parallel high-performance computing. And this language is an open standard. We've developed a compiler. We've developed the accelerator blocks underneath. And so we now have a technology which can work at a higher performance, at a fraction of the power either than x86 server CPUs, or GPUs in these applications. Target markets include computing for markets such as financial transactions. We're seeing a significant uptick in that space already. And then in the military space, not only for applications such as radar, but also in the high-performance computing side of military as well. We are I think the only PLD company that is talking about the technology we have. I believe over a dozen customers using the product from us to date. And we think this opens up a really new, exciting space for us. It's exciting because first of all, it's a new growth opportunity, but it's also one where, if you look at computers, there's typically a 3-year refresh cycle. And in the computer side, they would use or highest and most expensive FPGAs for this acceleration. So it gives us access to a market that would go through a much faster refresh cycle than we traditionally see in our Industrial or communications business and also is quite large in terms of space. And again, we've already seen some sales into that category and a growing business there. So we’re quite excited about that. And the first part of the question? Ronald J. Pasek: The first part of your question, Ian, the ASIC replacement business we had was specific to Q3. John P. Daane: And it was within the computer networking sites. So that's why you saw the downtick going into the fourth calendar quarter, when you look at the Q1 numbers, we're really not expecting much difference out of Computer and Storage. Overall, it's roughly going to be flat with networking up, Computer slightly down. But not a significant change in either market again for the first calendar quarter.

And we'll go next to C.J. Muse with Barclays Capital. Christopher J. Muse - Barclays Capital, Research Division: My question, I guess first question, and I recognize that the visibility's clearly limited. But when you think about your share at 40-nm at 60 plus percent and your customers moving from Xilinx and minus 1 to you this year, what kind of share do you guys can gain overall in 2012 in terms of percentage terms? John P. Daane: Well I think in 2011, we gained about a total PLDs about 1.5%, somewhere in there. I think within FPGAs it was 2%. I think in the prior year, we gained about 2% overall in PLDs. It was about 3% in FPGAs, somewhere in there. So it's been -- we've been gaining market share for actually a long period of time and FPGAs in particular, it's been 9 straight years of market share gain. Hard for me to predict, 40-nm clearly as you point out, as that ramps our market share in 40-nm is substantially higher than our overall FPGA market share. Overall in FPGAs we're still well below 50%. So having 2/3 of the 40-nm node as that ramps will continue to ship market share in our favor. It is hard to predict because I think the one thing that could have a short-term impact is an obsolescence program. Clearly, that helps accelerate future revenue into a near-term period of time. That could have a temporary impact ultimately again just in a short run. And so, for that reason, and lots of others, it's really hard to predict exactly what will happen this year. Christopher J. Muse - Barclays Capital, Research Division: And then in terms of recovery, you've talked about Military down, very lumpy business, and also in terms of Wireless burning through inventory, but when you look through that and you see where end demand is today and the visibility you have to at the inventories, what do you think drives a recovery? Is it going to be 1 or 2 segments or will it be pretty broad based and kind of any color you can add there, segment-wise and then how we think about mix and implications for gross margins would be very helpful. John P. Daane: Well I think Wireless, quite honestly, is weak across several geographies right now. I think any one geography picking up does help that business. Number two, because the -- some of our end customers have inventory, what they are doing is working through that at this point. So we're basically under shipping their actual usage. And so we do think at some point this business will stabilize and start to pick up. Telecom, as we mentioned, has been very fairly stable. I do think it's going to have some better growth in the future certainly than we saw in 2011 where it was I believe just slightly down to flattish. A specific time? Very hard to predict at this point. Ronald J. Pasek: On gross margin, I think I would stick with the guidance we gave back at the analyst conference. You should see margin this year at 70% plus or minus 1. And to your point, it will just vary by quarter depending on the flavor of certain verticals.

And we'll go next to Tristan Gerra with Robert Baird. Tristan Gerra - Robert W. Baird & Co. Incorporated, Research Division: So looking at 2012, it looks like we should expect more or less the same mix within markets with potentially communication increasing? Or is there any other shift that we could expect percentage-wise? John P. Daane: Tristan, it's very difficult to project 2012 at this time as we have -- had done for several years. We particularly like to stay with just one quarter guidance at a particular time. I do think if you look at the end markets, communications should have strong long-term cycle growth because of deployment in China for 3G continuing. India, 2G and 3G, and then Japan and North America on 4G. As we've noted in the past, backhaul for wireless communications, the bandwidth has to increase. So there's no equipment allowed to be deployed, either microwave or fiber. And then ultimately, as we've also talked about, to try to fully utilize the spectrum that's out there, we should see more base station, in particular, radios deployed. All of those products have FPGA content, and those could be accelerators of revenue. And as we have also commented Telecom should start to increase simply because we're seeing some saturation in some markets because of video and data usage. Industrial, Military and Automotive should continue to grow for us due to the fact that they're increasing electronics content, our design win momentum, the fact that particularly for Military and Automotive, they're smaller markets for us. And industrial is fairly under penetrated for programmable logic and offers a very, very large opportunity that honestly, because of its volume, everybody else in semiconductors ignores. And then as we talked about in the past, 40-nm really is driving the growth of the FPGA industry and that clearly is in our favor. So we think we've got longer-term, some good product cycles in what are our key markets. We clearly have the design win momentum. We'll just have to see how it plays out and again because visibility is very limited with our customer base, we prefer to just take it one quarter at a time.

And we'll go next to Christopher Danely with JPMorgan. Christopher B. Danely - JP Morgan Chase & Co, Research Division: John, you said you expect Q2 to be up. Would you expect all end markets to be up and any one particularly more than the other? John P. Daane: I cannot project exactly what will happen on a vertical basis. I think what we're doing is we're projecting it off of a couple of things. One is where we've seen for instance Military decrease this quarter because of program timing, we've seen some continued burn off of inventory in Wireless. We don't see any such events happening in the second calendar quarter. They could, but from what we see today, there's no onetime customer issues inventory or other items happening. Number two, based on our conversations with customers, distributors, inventory is extremely thin. And so, we think therefore, if demand continues at its current rate, customers are going to have to return to purchases. And the third item is we are seeing better business environment from a turns order perspective, and we're taking that into consideration as well. What each market will do in the second calendar quarter is very hard for us to predict. So we'll just have to see how it plays out when we get there. Christopher B. Danely - JP Morgan Chase & Co, Research Division: And then for my follow-up, a question for Ron. So Ron, you guys are keeping the 2012 R&D guidance. Can we expect R&D to drop in 2013 as a result of the spending from this year? Ronald J. Pasek: So Chris, you're getting a little far ahead there. We haven't even begun to plan for next year yet. So I really can't comment on that right now. You do know our long-term business model, which is to have R&D at 18%, roughly. So I think if you're modeling something that's still a good long-term model number to use.

And we'll go next to Ross Seymore with Deutsche Bank. Ross Seymore - Deutsche Bank AG, Research Division: Can you just remind us whether it's fourth quarter or full year 2011, how much Military was of sales? And then generally speaking, do you expect that Military business to grow in 2012 on a full year basis? John P. Daane: In terms of the full year, we're not, at this point, projecting any particular vertical and what they’ll do. Again, visibility is overall limited. I believe for the fourth quarter, Military was about 11% roughly, of sales. I don't have the full year number in front of me.

It seems to be a little less than that. John P. Daane: Yes, I'd project it'd be less than that too, because it was roughly I think about --

In the high -- John P. Daane: 7% or 8%. Ronald J. Pasek: About 9%. John P. Daane: Okay. So 9% for the full year. Ronald J. Pasek: Military -- there's 3 verticals or really 1 main vertical and 3 sub-verticals that we consistently discuss as our long-term highest growth vertical. That's auto, industrial and Military. So without giving a specific number, we can tell you that Military is one of our fastest growing end markets. Ross Seymore - Deutsche Bank AG, Research Division: Great. As a follow-up question, can you remind us what disti versus OEM revenues were in the fourth quarter, maybe the full year? And then as far as the order patterns, inventory burn, at some point rebuilding inventory, et cetera, discuss the differences you're seeing between your distributors and the OEMs? John P. Daane: Well, first of all, remember that we recognize revenue when our distributors ship the product to the end customer, not when we ship it to distribution. We do include the distribution inventory within our month supply and end figures so that you have a full understanding of the inventory between us and distribution. I don't think we have a good breakout right here today... Ronald J. Pasek: You'll see it in the K, though. We do break it out in the K. John P. Daane: So you'll get the OEM versus distribution revenue breakout between the 2. And again, I think the inventory and the behavior really depends more on some of the vertical markets than it does small customers, large customers. Happens that you see more large customers in wireless. So perhaps you'll see some more large customers down this quarter. But overall, I think it's more tied to segment than it is anything particular due to large or small customer.

And we'll go next to Glen Yeung with Citi.

This is Delos Elder for Glen. I just wanted to go back to the obsolescence program you mentioned. Are you able to quantify or even qualify the share gain there, or the opportunity you're looking at? And over what time frame that will occur? John P. Daane: No, all we can do is take a look at our Mainstream and Mature categories and compare that to our competitors. And based on that, get a sort of rough understanding of what is happening from an acceleration perspective. I think ultimately, that's all we're able to do, internally. We don't see any particular product breakdowns that provide the data. We don't see any particular detail that provides any more color. But it is significant because if you look at the fourth calendar quarter, had our major competitors’ mainstream and mature products behave like ours did and our behaved very normally. And we would've outperformed them in the quarter. So I point not only because I think it is fairly significant to short-term revenue growth and short-term revenue flow. Perhaps you could ask them as to the details of that.

And we'll go next to Ruben Roy with Mizuho Securities. Ruben Roy - Mizuho Securities USA Inc., Research Division: John, two questions. First, on the wireless side, as new programs and new designs are being done, it seems like there's more competition for FPGAs this go around than you may have had, and when you're looking at 2.5G and probably initial 3G base stations. I'm just wondering if you've seen evidence of that as you guys are out there trying to win designs, both from an ASSP perspective, as well as perhaps some of your larger customers potentially looking to take some of the FPGA technology and maybe go the other way and go back into ASIC. John P. Daane: Actually, we don't see, I would say, a major shift there. Within existing equipment base, I think the partitioning is remaining roughly the same. So are there ASICs in these systems? Absolutely. Are there DSPs? Yes. Are there FPGAs? Yes. But we're not really seeing a significant change in mix, I would say within the existing systems. And the ASSPs that we see really are along the lines of DSPs; DSP combinations with microprocessors. So I would say in general, we're not seeing any particular change. There is discussion about obviously femto cells. I'm not a huge believer in femto cells. That is an ASSP play. It does not really include much, if at all, any FPGA content. And then there's also depending on the carrier discussion of how to create higher utilization of existing spectrum and the discussion of microcells or pico cells. And picos, there may be the adoption of more ASSPs. But overall, we don't see that as a disruption because ultimately, first off, picos will be additive, not subtracting from macros. So that doesn't have any impact to our business within the macro space. At #2, I think most of the major carriers and now most of the major equipment suppliers are realizing that you simply can't deploy more pico cells without having significant intelligence and handoff -- or intelligence to do handoff. So you can better use spectrum within congested areas. And so what's being discussed is perhaps macroarchitectures moved into micro- or pico, and in that case, the FPGA would win out. And I think there's still a lot of early discussion there. So overall, we haven't really seen, I would say, within the existing equipment, any significant change. Within programmable logic, there are several competitors here. We do see all of them, and we always have. But we don't see a dramatic shift away from Altera at all. Ruben Roy - Mizuho Securities USA Inc., Research Division: And quickly, in terms of 2012, given that you have this sort of onetime in nature Military event in Q1, and based on inventory digestion coming to an end potentially, do you think that you can have another year that's favorable compared with the semiconductor industry in 2012? John P. Daane: Well, I think that's our long-term goal is to continue to outperform the semiconductor by 2x. We've done it for a couple of years. We believe in general and on average we could do it over the long haul. There may be a year where that doesn't happen. What I would say is if you go back to the third calendar quarter, remember, Military was very soft in that quarter. And that happens to us. Military is more program-specific. It does come in and come out and even though we had a very weak Q3, we still had very solid growth within Military for the full year. So I’ll have to see how the overall year plays out, but we do think, because of the growth of 40-nm and our early prototyping and some early production of 28 clearly, advantaging Altera from a market share perspective that we should still be able to do extremely well this year.

We'll go next the Sanjay Devgan with Morgan Stanley. Sanjay Devgan - Morgan Stanley, Research Division: The first question I had was, just wanted to go back to the 28-nm. You talked about winning 2/3 of the design wins at that node. As you -- based on the feedback that you've gotten from customers, I was wondering if you could help us understand what it that's differentiating your products? Is it the transceiver, the time to market, the number of gates? I'm just trying to -- any kind of color you can provide there on what's differentiating you guys in enabling that 2/3 share? John P. Daane: The features that are important by market segment, I think the features that are key for us right now is remember, design win incumbency, which is a term that actually our major competitor coined maybe 10 years ago now, is real. Customers who are doing designs with an existing supplier tend to stay with that supplier unless the other guy has a better product. Right now we don't see the other guy having a better product. One of the key advantages we have is software productivity, compile times as an example. Some of the features that we have are more ASIC-like, like static timing, analysis capability being in a format that's very much like the ASIC industry has used. Those advantages carry forward because the engineer works with your design tools so if yours are better, they will stay with you, #1. Number two, we have the performance it was Stratix V at the high-end across the family. We have much lower power consumption than our competitor, which actually is very important for all markets. Variable precision, DSP with floating-point capability, very important for wireless, medical and military applications, the transceivers, again anything above 6 gig is still -- the only company that we can see shipping in the industry is Altera. And so, looking through all of the press releases of people, we still don't hear of any working product other than above 6 gig other than Altera. Our transceivers go up to 28 gig. Many of the newer standards require greater than 6 gig. So if you look at the newer standards of things like PCI Express all the way through whatever it is, they all require higher-speed transceivers, certainly a big advantage. Then we have things, point tools like DSP builder and Qsys, which help customers enable DSP and microprocessor peripheral capability and then, again, those are productivity enhancement tools. So I think we have a lot of advantages with the tailored architecture. We have a lot of advantages with tools. We have the incumbency. It would take a much better product from our competitor or it would take Altera failing to see a significant market share shift, neither of which we see in the marketplace right now. Sanjay Devgan - Morgan Stanley, Research Division: And just as a follow-up, I just wanted to get back to the outlook for the March quarter. You talked about your book to bill being greater than 1. So how should I think about the turns business or did I misinterpret that? Ronald J. Pasek: No, the turns number is in the low 50s, which isn't bad. It’s higher than it has been recently, but it's lower than it has been historically, at some point. So I think that's the highest it's been in about 7 quarters. But it's still a reasonably good number. I means we enter the quarter with half of the revenue for the quarter in backlog. John P. Daane: So we would anticipate that long term, our turns will get back into the mid to high 50s, maybe in the low 60s where they were a couple of years ago before the unfortunate Japanese earthquake disruption and before that, the sort of shortages that we saw in the industry. That's where we operated for many years, that's very expect the go back to in the future and we're sort of slowly climbing back there right now. Ronald J. Pasek: Remember, when our lead times are normal, which they are, it's not unusual to see turns at this level or event higher to John's point.

And we'll go next to Sujeeva De Silva with ThinkEquity. Sujeeva De Silva - ThinkEquity LLC, Research Division: I think last quarter, you talked about 28-nm being about $2 million or so. Did you give the number for this quarter? Or if not, was it up sequentially? John P. Daane: Yes, the Stratix V, it's -- all this detail is now on the press release, but Stratix V was up 49% sequentially, and we did say we shipped revenue for Arria V, but it has it's well under $1 million. So we haven't reported that as a specific revenue starter point yet. Probably very soon, you'll see that from us. Sujeeva De Silva - ThinkEquity LLC, Research Division: And then 28-nm, you talked a lot about in the last question about that, but your compared is pretty bullish on their Kintex product versus your Arria. You can you talk about how those 2 stack up? And also when will you have a stack silicon product off? John P. Daane: So specifically, Arria versus Kintex, what we have I think within that segment the predominant advantage we have is much lower power. Features generally elsewhere are fairly similar. Stratix at the high-end, we have much higher performance as well as lower power, higher speed, integrated transceivers certainly whether integrated or not, higher speed transceivers. And then at the low end, we see we've also got a performance advantage with Cyclone. In terms of -- sorry, I'm fighting a cold and my memory is not working, stacked silicon, the technology's early so we've done a number of test shifts and technology developments to prove out the technology. There are a number of things to work on in order to get it right. We don't view it as really the product to do, perhaps multiple FPGAs into one chip. We can do that monolithically very well with very good cost structure. It is a technology in the long term, I think it will be key to our industry, semiconductors. I think you'll start to see integration of various types of components, analog, memories, other technologies integrated into singular devices, predominantly to cut power consumption. And obviously, we're doing a lot of R&D within that space and you will see products from us in the future when the technology is mainstream and cost-effective.

And we'll go back to Uche Orji with UBS. Uche X. Orji - UBS Investment Bank, Research Division: John, can I just ask you, I mean a lot of good questions have been asked, but let me just ask you about -- go back to questions that been asked on 28-nm and ask you if you can follow up there. At this stage, there's a lot of claim and counterclaim as to who is ahead and who isn't ahead and perhaps it's too small at this stage to even figure out who is better. Two questions I want ask you. The first question is to what extent do you think that you being the incumbent now at 40-nm allows you to hold on the 28? And frankly, I mean you had to fight these incumbents as seeing all the way from 130-nm through until 65 when you had your breakthrough. Now at 40 you are incumbent, and Xilinx is making claims about market share. Do you think that, and I'm just wondering to what extent is incumbency important here? And if it is, does it help you? And then secondly, as we look at 40-nm's growth for 2012, our view is that this is really what's going to be the key growth driver. What is your view as to product penetration and growth in 40-nm, say over the next year? John P. Daane: So on 40-nm growth, I am unable to project specific revenue growth for the product line. The reason for that is that's really tied to individual programs and again because visibility is limited and were really not providing any long-term forecast for the end verticals. It's very difficult to impossible to do on a product line. What I would note is in 40-nm our revenue doubled last year in 2011 over 2010. And it was at the end of the year, 22% of revenues. And we're still in the growth phase of 40-nm. In fact, it is really going to be the dominant revenue driver for programmable logic for the next several years. So because of that, I think we're in a great space to continue to take market share and grow faster than our particular industry. Secondly, in 28, incumbency is key. And again I've commented on this many, many years ago, having joined this industry from the ASIC industry, the difference was in ASICs, customers used third-party tools. So it was fairly easy for them to switch vendors and I assume that was the same in programmable logic. And what I and many of the others that joined found out is that incumbency was real. Engineers get very wed to a particular design tool because they are different from the vendors. So they become expert users, and they do not necessarily want to switch because it requires a time to learn the new tool and ultimately, from a management perspective, that means the program may slip or may be delayed several months while the engineer learns the other tool and very rarely do you hear any engineering VP or general manager saying it's okay to take a product delay hit in order to switch. So from that perspective, incumbency is key. A second reason incumbency is a big deal is many designs that you see over time become a cut-and-paste. In other words, they take an existing program and they add new features, capabilities to it over time. And that always favors obviously the one who is in the current socket, because ultimately, our architectures are different. So to move from one FPGA to the other does require redesign effort. The DSP blocks are different, memory interfaces are different, a lot of the intellectual property blocks that customers are using from us both hard and soft, are quite different and so for those reasons, there is a lot of work to do to change. So from that perspective, incumbency is very key. What we had to do to win market share in nodes starting at 130-nm was quite honestly, have a better product because if you look at 130-nm forward, it was very rare that Altera was actually first to market. In fact, at 130 we were quite late to competition. I think that was actually true also when we had for instance 60-nm, what we did have is better features, better product, better technology and because of those reasons, we were able to entice engineers to take the productivity hit and look at us and switch to us over our competitor. What we do not see in 28-nm is any compelling technology feature that our competitor has, because of their unified architecture being really a middle of the road type of technology. We don't see anything that is compelling enough for a customer to want to switch. And so, I think ultimately, we do carry that momentum. It's quite real. We talked about it, us being disadvantaged for it for a long time. Now we are advantaged by it. We just need to continue to execute and continue to come out with strong products. If we do that, I think we're in good shape. Of course, as you know, this is definitely, as with all industries, a difficult industry. You have to work hard every year. You should never get arrogant, always keep your head up and look out for competition from different angles and we're trying to absolutely do that.

And operator, we have time for one more question.

We'll take our final question from Nathan Johnsen with Pacific Crest Securities. Nathan Johnsen - Pacific Crest Securities, Inc., Research Division: I was wondering if you can give kind of an update on FPGAs embedded with microprocessors on 28-nm and whether you should expect that to account for any meaningful portion of design wins anytime soon. John P. Daane: Yes, it's actually -- we are winning designs on our platform already. We did put out a Virtual Target in combination with Synopsys that is a bay for customers to do early software development. We actually are the only one shipping that product, even though our competitor did announce a similar technology with another vendor after us. And we are planning to come out with silicon still on schedule. And so we'll be shipping products this year. We are winning designs already on it. We do have some differentiating features from our competitor in this space that we think are very key. And in terms of meaningful revenue, I think it's still -- it's not going to be, I think for either company, meaningful this year. I think it's really -- you're going to see more revenue in 2013. Nathan Johnsen - Pacific Crest Securities, Inc., Research Division: Great. And then just one quick clarification in terms of your guy’s strength. Since your mid-quarter update I think you highlighted smaller customers and industrial, was there any other sources of strength? Or was it pretty much concentrated there? John P. Daane: Yes, I think the only -- there's nothing really notably that's increasing this quarter. We are seeing a lot of our end markets flatten. Some of them are coming up. Generally, I would say the notable changes this quarter are really Military down because of the program timing, and then also Wireless, because of inventory end customers. Some markets will be up, some markets may be slightly down. But overall, we do feel like we're hitting the bottom.

Great. Thank you, David, and as we wrap up today, let me note that Altera will appear at 3 investor conferences this quarter. On February 16, we'll participate in the Goldman Sachs Technology and Internet Conference of 2012 in San Francisco. Then later in the quarter, we will attend the Morgan Stanley Technology, Media & Telecom Conference also in San Francisco. And finally, on March 5, we'll present at the Raymond James 33rd Annual Institutional Investors Conference in Orlando. This concludes Altera's earnings conference call. Thank you for your interest and participation.